Shared Equity Programs
Fannie Mae supports affordable housing through the purchase or securitization of several types of shared equity mortgages.
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Fannie Mae is making shared equity lending easier to access and reinforce protections for consumers:
- Shared equity can be complicated, so we’ve updated requirements to ensure borrowers understand the transaction. We’ve also developed a new rider for properties with income and resale price restrictions, the Shared Equity Amendment (Form 2200), and updated policies on Private Transfer Fees for shared equity transactions. Learn more in the May 2023 Selling Guide Update.
- Looking for a shared equity partner in your area? Check out the Duty to Serve Self-Certified Shared Equity Programs report in Fannie Mae Connect™ (seller/servicer credentials required).
Shared equity programs preserve affordable homeownership opportunities by allowing borrowers to purchase homes at below-market prices. In exchange, borrowers agree to sell the property only to other income-qualified buyers and at a restricted sales price.
There are three types of shared equity programs:
Community Land Trusts (CLTs)
In a CLT, a low- to moderate-income borrower can purchase a home on land leased through a municipality or nonprofit at affordable ground rent rates. The ground lease will typically require that the home can only be purchased by a low- to moderate-income family when resold.
Visit the Learning Center for additional resources, including fact sheets, checklists, and other resources.
Income and Resale Price Restrictions
A resale restriction places a condition on the resale of a property. It can restrict resale based on a range of factors, from age to employment. Affordability-focused restrictions, focused on a borrower’s income or the price of the home, preserve accessible homeownership and fall under the shared equity umbrella.
Grounded Solutions Network, which previously created the CLT Network Model Ground Lease, has released a Model Declaration of Affordability Covenants with Refinance and Resale Restriction and Purchase Option (sometimes referred to as the Model Deed Restriction), that incorporates many shared equity best practices for income-restricted properties and may be useful to your shared equity partners. Learn more about the Model Deed Restriction at GroundedSolutions.org.
Limited Equity Cooperative
In a limited equity cooperative, residents own shares in a cooperative housing corporation that can be resold at prices that ensure continued affordability and allow for modest equity growth.
Homes in these communities may be eligible for Fannie Mae financing via the Project Eligibility Review Service (PERS). See Fannie Mae Selling Guide section B4-2.2-06, Project Eligibility Review Service (PERS), for eligibility requirements.
Identifying Shared Equity Programs
The Federal Housing Finance Agency (FHFA) provides general guidelines for identifying shared equity programs in its Enterprise Duty to Serve Rule.
Learn more about them here.
If you're working with a program that preserves affordable homeownership, but you're not sure whether it falls under any of these categories, contact your relationship manager to help us better understand the program.
